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Lionsgate CEO Calls It: Online Channels and Apps Are the Future of Entertainment

Content Can't Just Be Edgy -- It's Got to Be Where Viewers Want It

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Lionsgate CEO Jon Feltheimer doesn't have a marketing title, but as the leader of the film and TV company behind edgy shows like "Mad Men" and "Orange is the New Black," he understands that top thing marketers are currently trying to wrap their heads around: content.

"Online channels and apps are where the future is," he said. "If you narrow focus and look at a fragmented audience, that's the way to reach audiences we want to reach and monetize content in a more effective way. It's too late for us to build a linear channel bouquet, but maybe that's where the future lies for us and for other people."

The company now spends at least 25% of its own marketing budget on digital, he said, speaking during the the 4A's Transformation conference in Los Angeles on Monday.

While many of the biggest marketers still need to reach broad audiences all at once, the more niche approach also makes it easier for marketers to "be more focused" on the audiences they need to reach. "We didn't compete with huge conglomerates or huge shows and movies," Mr. Feltheimer said. "We aimed at audiences we knew [so] we knew where to market and spend money."

"Mad Men," which Lionsgate eventually got behind along with its partner AMC, was one of those success stories. Lionsgate had concerns about "being able to aggregate a big enough audience to make the economics work," he explained. "That challenge made us want to take a shot."

The results have been off the charts in terms of brand value, he said. "AMC still tells me they're losing money on this show," he said while laughing. "They don't talk about the brand value -- it's incredible – or the CPM increases they've probably had across the board."

Lionsgate has been able to take risks on edgier, more niche content because the other half of the business strategy has been to hook more steady initiatives and content that can provide an evergreen cash flow.

Lionsgate and Mr. Feltheimer were ahead of the game with better-quality content that reaches fewer people. But now it's about more than pushing edgy content. It's about giving consumers content where and how they want.

Referencing Popcorn Time, a piracy site that was taken down and that Mr. Feltheimer described as having "the best navigation and most crystal-clear piracy I've ever seen," he said: "The guy running it took it down and said, 'This proves to all of you thieves at the studios you should give all the people content for the price they wanted.' I thought there was something horrible about that but also something right about that. We have to give the consumer content where and when they want it, and we've got to be flexible and smart about it."